Financially Fat to Financially Fit!

Guest Post: Financially Fat to Financially Fit!

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Today I have a guest post for you from my colleague Richard Winstone (not pictured above). Richard has just launched a new, diary-style blog called Financially Fat about his quest to achieve ‘financial fitness’.

I thought Financially Fat could be of interest to many Pounds and Sense readers, so I invited Richard to create a guest post about it. He was happy to oblige, so here is his article.

 

Hi everyone. I’m Richard Winstone and I write a blog called Financially Fat.

I want to start this post by thanking Nick for allowing me to guest blog on Pounds and Sense. I appreciate the feedback he has given on my blog and am really proud to have this opportunity to showcase Financially Fat to the Pounds and Sense community.

What is Financially Fat?

“If financial fitness is the aim, then I am Financially Fat.” This is the tag-line of the Financially Fat blog.

Being financially fat isn’t supposed to paint the image of a fat, wealthy man. It’s meant to imply that my finances are out of shape, which they are.

I’ve decided to take a no-holds-barred approach to financial honesty in my blog: the good, the bad and the ugly. So, in the second post I wrote down my complete financial position. I left nothing to the imagination and fully revealed my “financial nakedness”. I did this because I wanted my readers to know that I’m not another rich guy giving quick tips to save a few quid (not that there’s anything wrong with that), but that I’m actually financially struggling and that I’m taking action to improve my financial fitness.

Financially Fit is written as a diary, in which every Friday I comment on how I did with the previous week’s targets and set new targets for the following week. There are also a couple of sections of me rambling about my thoughts from the previous week, which I hope are insightful but may just be the ramblings of a mad man 😉

The purpose of the blog is two-fold. First, I want to chronicle my journey from being financially fat to being financially fit. I think this is easier to do weekly while I’m on the journey rather than try to remember what I did after (I hope) I’ve become financially fit. And second, I’m hoping to provide a step-by-step guide for others to follow to help improve their financial fitness. I write and post my blog to the over50smoney.com website and email it out to our over50smoney community each week.

So, below is a quick summary of how my blogging journey has gone so far, now that I’m five weeks in…

Meet Me, Richard Winstone

I won’t say much about this. It is a simple five-paragraph post introducing myself and the Financially Fat blog.

Week 1 – My Starting Point and What Is Financially Fat?

This is another introductory post, but it goes into much more detail. I start by detailing what I hope to gain from Financially Fat and then move on to set out my starting financial position, including my salary, savings, debts, shares, assets and anything else I could think of. It’s a complete works of my financial position, which I’ve committed to reviewing monthly in a similar format so I can see how my financial position improves month-to-month (the next review is this Friday and I’m nervous!).

Week 2 – Workout #1

Right, Week 2 is when it starts getting more interesting and where the format of the blog really starts to become clear. I started this post by highlighting three things I did that were bad for my finances over the previous week, which were:

  • Moving home (kind of unavoidable)
  • Working from Costa far too often
  • Dining out

I then came up with the idea of setting targets for the following week to address things that I’ve done wrong in the previous week, with the hope that I’ll eventually move away from bad habits that cost me way too much money. This seems to be working to be honest, at the moment I’m down to working from Costa only once or twice a week and usually only for a couple of hours each time rather than full days.

Week 3 – A Marathon, Not A Sprint

Continuing the development of the blog format, Week 3 is where I started titling the blog posts a little more nicely, and where I started summing up my financial savings from following the targets on my previous week.

In this post, I point out how working from Costa only once a week instead of five times a week can save me around £50 per week, over £200 per month! I also discuss setting yourself targets as you follow the blog. Reading it is (I hope) interesting, but for the blog to be useful you need to follow the thought processes I go through and make sure you’re applying them to your own life. So, if you have a small, seemingly inexpensive habit that you do frequently, then I recommend reviewing how much that habit has actually cost you over a month and see how much you could save by cutting down.

Week 4 – Invest In Knowledge

In Week 4 I discussed the target of reviewing my standing orders and direct debits. After just one review, which took about 45 minutes, I was able to save just under £600 per year! Which is insane. I continued to review into the following week but was only able to save an additional £1 per month by changing my gym membership.

This is also the week I formalised my “Ramblings” as an introduction to the blog, I hope you enjoy reading them and please feel free to email me any time to comment, ask questions or provide suggestions (I’ve been getting some great tips from readers!).

Week 5 – Overcoming My White Whale

By this point, I’ve started getting really into the money-saving game. I’m also discussing things like increasing income to ensure I’m not reliant only on my salary.

But, as the title indicates, I talk about tackling my biggest challenge yet, which is currently destroying my finances – smoking! I know, it’s a horrible habit and I’m obviously very aware of the negative health affects as well as the impact it’s having on my bank balance. So, I’ve set out a five-week plan to quit (which I can say I’m currently doing okay on, but it has only been four days).

Cutting out smoking could save me around £2,400 per year, which means from the Financially Fat blog I would have saved around £3,200 a year in disposable income just in the first five weeks, and there’s still so much more work to do!

Follow the Financially Fat Blog

That’s it for the summary of my first six blog posts. I hope you will click through and give them a read as there’s a lot more information in there and some interesting views, I like to think.

If you’re interested in following my blog, please head over to over50smoney.com and sign-up for our newsletters. Or, if you’d rather not receive emails, you could just follow us on Facebook. I write and post every Friday and put links on our Facebook page, so please consider liking and following this. Thank you 🙂

I want to thank Nick again for letting me write this short summary of Financially Fat. I really hope you find it as useful as I am. If you have any questions or comments, or just fancy a chat about finances, please feel free to reach out to me directly at richard@over50smoney.com. I sometimes take a few days to reply, but I promise I get back to every email I receive.

I’m Richard Winstone and I am Financially Fat.

 

Many thanks to Richard Winstone (pictured, right) for this article. I hope you will take a moment to check out Financially Fat.

I particularly admire the honesty with which Richard sets out his financial position. I try to be honest about my finances on PAS as well, but not in nearly as systemaRichard Winstonetic a way as he is doing!

If you are also ‘financially fat’ (as Richard defines it) I hope you may find the info and advice on the new blog inspires you in your own quest to achieve financial fitness.

As always, if you have any comments or questions about this post (for me or for Richard), please do share them below.

 

Losing weight

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Spotlight - How Are People in Britain Saving?

Spotlight: How Are People In Britain Saving?

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HSBC Bank (in association with pollsters YouGov) recently conducted a survey on saving in Britain. This looked at people’s savings habits and came up with some eye-opening results. I have summarized the main findings below, with graphics where relevant.

What Are the Most Popular Savings Options?

Unsurprisingly, the survey found that cash was Britain’s most popular saving option, with 53% of people saving this way. Other methods are also popular, however, as the graphic below shows.

Investment choices

The survey also found noticeable regional differences in savings habits. London appears to lead the way on cryptocurrency, with 6% of residents saving this way. People in the East of England are the most likely to invest in shares (23%), Scotland sees the most people investing in a pension (35%), and Wales has the highest proportion of investors in gold (4%) and antiques (4%).

Investing preferences by region

 

Couples living together top the table for people trying to save (60%), ahead of those who have never married (57%) and those who are married or in civil partnerships (55%).

The survey data also suggests a gender divide, with men more likely than women (57% vs 53%) to say they are actively saving in general. Men are also more likely than women to be saving into a pension (35% vs 26%) and are nearly twice as likely to invest in shares (21% vs 12%). This is summed up in the graphic below.

Saving Men vs Women

Only just over half (55%) of the population say they are actively saving for the future, but the survey found younger age groups were more likely to be putting cash aside, with 62% of 18-34 year-olds saying they were regularly saving, compared with 55% of those aged 45-54.

And while there’s only a small difference between men and women when it comes to putting money away in cash (54% vs 52%), the data does suggest a wider divide when it comes to other types of investments. As mentioned above, more men than women (35% vs 26%) say they are saving into a pension. Men are also nearly twice as likely to invest in shares (21% vs 12%) and investment funds (12% vs 6%) – while six times more men than women say they have bought into cryptocurrencies.

My Thoughts

As a money blogger, it was interesting for me to see this snapshot of how people in Britain currently save for the future.

One thing that struck me was the relatively small number of people – and women especially – who invest in stocks and shares. Although this can be riskier in the short term, if you are saving for the medium- to long-term, history shows that you are likely to get better results investing in equities (probably via a collective vehicle such as a tracker or investment fund) rather than cash.

Right now, the best interest rate you can get on cash savings is about 1.5%. With inflation in the UK currently up to an eye-watering 9%, this means money kept in a savings account will be losing value in real terms.

Of course, we all need cash savings to fall back on when the unexpected happens (a popular rule of thumb here is three to six months’ worth of expenditure). And there may also be particular things you are saving up for, e.g. a deposit on a house. In that case, you may prefer to save into a cash account, so your money is protected under the Financial Services Compensation Scheme and readily available when the time comes.

But if you are saving for the (indefinite) future and/or retirement, over a period of years investing is very likely to produce better returns for you. To give you an example from my own experience, regular readers will know I have (currently) around £23,500 in the robo-investment platform Nutmeg. Since the start of this year, with the war in Ukraine and inflation fears, the value of my Nutmeg portfolio has fallen by 7.5%. In the six years I have been investing with Nutmeg, however, my portfolio has grown by 60% (time-weighted). Clearly in the last six years I wouldn’t have made anything like that if my money had been in a cash savings account.

Obviously with investing you have to expect ups and downs, which is why you should only invest on a medium- to long-term basis. But over a period of years, investments have almost always out-performed cash savings, often by a considerable margin.

So I do believe everyone should educate themselves about investing and perhaps take professional advice about it too. I would also like to see more taught about investing in schools. And if you have children (or grandchildren), I recommend introducing them to investing from an early age. A Junior ISA can be one very good way of doing this 🙂

One other observation is that the HSBC/YouGov survey makes no mention of crowdlending/peer-to-peer (P2P) saving/investing. This has admittedly lost some of its sheen in recent years, with projects failing and several platforms collapsing. Some people – me included – have lost money with this. However, I do still believe in the potential of investing this way, as long as you are sensible and diversify as much as possible to spread the risk.

Again, regular readers will know that I have modest amounts invested with the property crowdlending platform Kuflink and crowdfunding platform Assetz Exchange. Both of  these have been doing well for me and generating returns of 6% or more. I also have a small amount in the European business crowdlending platform Nibble. Clearly this type of investment is riskier than bank savings, as your money is not protected by the FSCS. But returns can be significantly higher, and unlike equity-based investments they are not directly affected by the ups and downs of the stock markets. The latter can be reassuring when markets are volatile, as at present.

  • Finally, in case anyone is wondering, I am not a fan of cryptocurrencies and don’t therefore invest in them myself or write about them on PAS. As this recent article indicates, while you can certainly make money with crypto if you’re lucky, it’s also very possible to lose your shirt!

Thank you to my friends at HSBC for allowing me to use their survey results and infographics. They also have some tips here on how to save money and stick to your savings goals.

As ever, if you have any comments about this post and/or any of the survey findings mentioned above, please do share them in the comments as usual.

Disclaimer: I am not a qualified financial adviser and nothing in this post should be construed as individual financial advice. You should always do your own ‘due dligence’ before investing, and seek professional advice if in any doubt how best to proceed. All investing carries a risk of loss.

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Could You Be a Holiday Let Landlord?

Could You Be a Holiday Let Landlord?

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Tourism in many parts of the UK is booming right now.

As we come out of the pandemic some people are venturing abroad again. But many others (perhaps deterred by the remaining restrictions and long queues and cancellations at airports) have been discovering (or rediscovering) what this country has to offer. This in turn has led to a growing demand for holiday rentals. That is only likely to increase as overseas visitors start to return as well.

There is undoubtedly money to be made from holiday lets, so in my post today I shall be looking at this subject in more detail. The article is written in association with my friends at the Suffolk Building Society and I shall be quoting from their detailed research on this subject (and using some of their graphics!).

Let’s start with the most crucial consideration for would-be holiday let landlords…

Setting

A recent study by the Suffolk Building Society found that the setting of a property was more important for potential landlords than other factors such as renovation potential or proximity to amenities. The key aspects for would-be landlords when considering buying a holiday let were:

  • A property that is in or near beautiful scenery (31%)

  • A property that is near the beach or coast (30%)

  • A property that is easy to manage and doesn’t require much upkeep (28%)

  • A property that is in an area that the landlord already personally knows or loves (27%)

  • A property that is in a popular tourist or holiday destination (23%)

This is summed up in the graphic below.

Factors landlords consider

Location

As you can see in the graphic below, Devon and Cornwall were the locations most aspiring holiday let landlords were considering, followed by the Lake District, Peak District and Yorkshire Dales.Desired holiday let locations

How Much Can You Make?

Being a holiday let landlord has many attractions, including significantly higher returns than are achievable from residential lets.

An apartment in a popular tourist area, for example, can generate £1,000 a week or more (in peak season at least). A recent report in Which? found that the average annual yield on a holiday let was just over 10%. This compares favourably with residential buy-to-lets, where around 7% a year is more typical. The Which? article mentioned above forecasts holiday let yields rising in future to 14% or more.

According to Sykes Holiday Cottages, the average holiday let owner is earning approximately £21,000 per year. You can also enjoy cheap holidays staying at the property yourself. And there are tax advantages too, as running a furnished holiday let (FHL) is considered a trade rather than an investment. This means you can offset mortgage interest costs against your income, as well as council tax and other bills.

On the downside, being a holiday let landlord is likely to be more hands-on. New tenants will move in every few days and the property will need to be cleaned, tidied and restocked on a regular basis. Covid precautions have added an extra dimension to this (though rules are now easing). There will be more admin dealing with a steady stream of enquiries and visitors. You will need to budget for advertising too, or risk ‘voids’ when your property is empty and you are losing rather than making money.  And finally, any garden at the property will need tending as well.

You can of course outsource some (or all) of this work to a management agency, but naturally there will be a cost to this, impacting your bottom line

Tips for Would-be Holiday Let Landlords

If you are planning to buy a holiday let property with a mortgage (as most people do), there are some important things to bear in mind. Buying a holiday let differs in some significant ways from buying a home to live in or even a traditional buy-to-let.

  1. Be aware that many holiday let mortgages require a landlord to have a mortgage, own their main residential property first, or have buy-to-let properties already – and in some instances, a combination of these.

  2. Understand that some lenders also have age restrictions for first time landlords, even if they are already residential home owners.

  3. Affordability assessments for holiday-let properties are usually calculated on the property’s rental potential rather than personal income and outgoings, but the lender will still want to understand the applicant’s financial position.

  4. Applicants may have to demonstrate a minimum income set by the lender, but this income can often be from a combination of employment, self-employment, investments, pensions, and so on.

  5. Be prepared to show third-party evidence of rental value in low, mid and high seasons from a verified lettings agent – even if not planning on using an agency to manage the property.

  6. Expect that the property will also be assessed by the mortgage lender. Properties in holiday parks, caravans or lodges, and those of unusual construction method may not always be accepted.

  7. Applicants should not assume they can market their property on short-term lettings sites such as Airbnb and Vrbo – some mortgage lenders have rules that prohibit this.

  8. Check the amount of personal use allowed so as not to breach terms and conditions. Mortgage companies will always allow the owner a certain amount of personal use but this can vary.

  9. Check whether the mortgage lender has a limit on the number of holiday let and/or buy to let properties that the landlord is allowed to own.

  10. Specialist holiday letting insurance must be arranged with public liability cover (typically minimum £1 million) included.

Suffolk Building Society’s Head of Mortgages, Charlotte Grimshaw, says: ‘Before jumping on the [holiday let] bandwagon, potential owners should do their due diligence; consider the financial commitments of not just the purchase but the maintenance, taxes, and other expenses such as cleaners and gardeners. It’s also worth taking the time to understand the market, and check out the competition before falling in love with a property that isn’t viable in terms of lettings.’ 

And she adds: ‘Applying for a holiday let mortgage can be a little more complex than applying for a traditional residential property or buy to let, so it can be helpful to approach an independent mortgage adviser to ensure the application has the best chance of success. A mortgage adviser will also have a good understanding of the different criteria that mortgage companies request, helping landlords find the most suitable product.’

Final Thoughts

Thank you again to my friends at Suffolk Building Society for their help with this article. I hope it has opened your eyes to the money-making potential of holiday lets. And if you are among the 17% of UK adults who (according to the SBS survey) considered buying a holiday let property during the pandemic, I hope it has given you some points to think about.

SBS offer holiday let mortgages themselves (along with standard buy-to-let and other mortgages). You can read more about their holiday let mortgages here.

As always, if you have any comments or questions about this post, please do leave them below.

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Nibble Finance Review

Nibble Review – European Crowdlending Investment Platform Open To Everyone

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UPDATED 27 May 2022

Regular readers of PAS will know I have a particular interest in P2P/crowdlending investment. Such platforms offer the opportunity to invest in loans to businesses or individuals and profit from the interest charged to borrowers.

With savings account interest rates still very low, many investors are understandably looking for better returns on their savings and investments. If that applies to you, European crowdlending platform Nibble is worth a look.

What is Nibble?

Nibble is a crowdlending platform launched in 2020 by IT Smart Finance, a company with over five years’ experience developing innovative products in financial technology.

Nibble’s business method involves investing in P2P loans to businesses made through Joymoney (the flagship product of the ITSF group). Private investors can then invest in these loans to take advantage of the interest paid by borrowers.

What Are the Benefits?

Probably the biggest attraction of Nibble to investors is that it offers returns on investment of up to 14.5%. As you will doubtless know, this is well above the average in the collective financing industry.

The minimum investment with Nibble is just €10 (about £8.40 at current exchange rates). The platform has an auto-investment tool, allowing trading to be fast and straightforward. You aren’t required to choose individual loan investments, as this is handled by the company. You simply choose one of three investment strategies (see below) based on the timescale over which you wish to invest and the level of risk you are comfortable with.

Other attractions include a minimum investment period of as little as one month, with interest credited to your account weekly. You can withdraw the interest if you wish or reinvest it in an existing or new portfolio.

In addition, if you want to withdraw money from your account early, Nibble say they will find a new investor for your portfolio for a small commission fee.

What Are the Risks?

Obviously no investment is without risk, but Nibble have gone to some lengths to keep this as low as possible. You can read a detailed article about this on this page of the Nibble website (warning: it is quite long!).

For investors opting for the lowest-risk Classic Strategy (see below) a Buyback Guarantee applies. That means that if a borrower defaults on payment, the company will return your money, including interest earned, for the time you held the loan.

For the other two, higher-paying strategies, the risk is shared between the investor and the platform in the form of a variable interest rate. The rate paid is decided by the Risk Committee, which meets monthly to assess how loan portfolios are performing and set rates accordingly. The actual rates paid therefore vary from month to month.

Obviously the other risk is that the lending company itself will go bust. For various reasons set out on the Nibble website this appears unlikely, but of course it is not impossible. If that were to happen, you would not be covered by the Financial Services Compensation Scheme (FSCS) which covers deposits in registered UK savings institutions up to £85,000. Nibble say that in the worst case scenario ‘a management company will be assigned to help the investor to recover funds in accordance with the rights of claim against the borrower. In addition, there is always a reserve fund which serves as an additional “safety airbag” for the investor.’

Finally, as loans are currently all in euro, UK investors will of course have to contend with exchange rate fluctuations, which could work for or against you.

How Do You Get Started?

If you wish to invest via Nibble, the first thing you will need to do is set up an account via the Nibble website.

As Nibble is a European operation, you will need to invest in euro and your returns will be paid in this currency. That obviously adds a layer of extra complexity for UK citizens, but there are various ways round this. If you have a UK bank account you will normally be able to make (and receive) payments in euro, but may be charged a NSTF (Non-Sterling Transaction Fee).

You could use your own bank to fund your account initially, but if you become a regular investor with Nibble you might want to use a service or account that charges lower fees. You could use a money transfer service such as Paysera or Wise (formally TransferWise). These will enable you to transfer funds between Nibble and your own bank account with lower charges (and potentially a more favourable exchange rate). Another option would be to open a Euro account with a provider such as Starling. This will allow you to receive and make payments in both sterling and euro, again at a lower overall cost.

Nibble offers investors a choice of three investment strategies according to income and risk preferences. They call this approach Flexible Investment. The three strategies are called Classic, Balanced and Legal. They differ in the level of income on offer, the degree of risk, and how those risks are distributed between the platform and the user. Each strategy is described below using screen captures from the Nibble website.

Classic Strategy

 

Nibble Classic Strategy

As you can see, this strategy offers the lowest level of risk and also the lowest rate of return (though still a respectable 8% at time of writing and up to 9.7% if you reinvest every time your investment matures). You can start with as little as 10 euro for a minimum period of just one month, so this may be a good way to test the water initially. Be aware that the minimum withdrawal is 50 euro though.

An important thing to note here is the BuyBack Guarantee. As mentioned above, this means that if a borrower defaults on their payment, the company will return your money, including interest earned, for the time you held the loan. That significantly reduces the risk of investing.

Balanced Strategy

Nibble Balanced Strategy

As you will see, the Balanced Strategy offers higher potential returns than the Classic Strategy but without the safety net of the Buyback Guarantee. The minimum investment amount is 100 euro and the minimum period seven months. According to Nibble this is the most popular strategy among investors, with almost 2/3 opting for it.

Legal Strategy

Nibble Legal Strategy May 2022

The Legal Strategy offers the highest potential returns. The loans in question are in default and facing legal action (hence the name). Nibble buy these loans at a heavily discounted rate and then seek to recover as much as possible of the amount owed. The minimum investment amount is 10 euro and the minimum period is six months.

As you can see, the Legal Strategy comes with a deposit back guarantee. This is a guarantee to return the full investment amount at the end of the investment period and a minimum yield of 9% per annum. The actual yield paid will depend on how successful recovery efforts prove, so you may end up with a return of anywhere between 9% and 14.5%.

According to Nibble 13% of their investors choose this strategy, which is a fairly new one.

My Experience

I wanted to try out Nibble myself,so I set up an account with them. The process was quick and straightforward. You just click on Create Account at the top of the Nibble homepage and follow the online instructions.

You are required to complete a short verification process before opening your account. This involves taking a photo of your passport, driving licence or some other form of ID, along with a selfie. You may use your mobile phone camera for this. It all worked smoothly and seamlessly in my case, and within a couple of minutes my application had been verified and approved.

After that, it is just a matter of making your initial deposit and deciding which of the strategies mentioned above you want to use. I chose the Classic Strategy as a low-risk test and so far everything has gone as promised. Interest is credited to my account every week, and so far at the end of each investment period I have reinvested all the capital and interest received.

I plan to try out the new Legal Strategy myself and will report in due course how this goes.

Closing Thoughts

If you are looking for a more exciting home for some of your cash that allows you to take advantage of the higher interest rates on offer in Spain (and other countries soon), Nibble is worth checking out.

I like the low minimum investment for the Classic Strategy and the fact that the minimum loan period for this is just a month. That allows you to try out the platform without risking too much or tying up your funds for too long. The BuyBack Guarantee provides additional reassurance. The other strategies offer higher rates of interest, though it is important to note the longer investment periods and the fact that rates paid may vary from month to month.

The website’s ease of use is another attraction, as is the fact that Nibble doesn’t impose any fees or charges on investors. As mentioned above, you do just need to bear in mind the need to switch between pounds and euro and the importance of minimizing the costs associated with this.

As a Spanish-based company NIbble doesn’t have too many UK reviews, but those that I have seen are almost entirely positive. On the popular independent Trustpilot website, they get an average score of 4.2 (‘Great’) with 75% of reviewers awarding them a maximum five star rating.

My advice if you want to try Nibble would be to start by investing modestly using the Classic Strategy (as I have). This will allow you to see how the platform works and get your capital returned with interest in as little as 30 days. You can then move on to the other investment options (Balanced and Legal) for bigger potential returns if you wish.

  • I have just made a small additional investment in the Nibble Legal Strategy, so will be saying more about this soon.

Obviously, nobody should put all their money into Nibble, but it is worth considering within a diversified savings and investments portfolio, especially in the current low-interest savings environment. As stated above, you should also bear in mind that your money won’t be protected by the Financial Services Compensation Scheme (FSCS), which protects deposits of up to £85,000 in most UK bank accounts. Of course, P2P/crowdlending platforms in the UK are not generally covered by the FSCS either.

I will, of course, continue to report on Pounds and Sense how my Nibble investments fare.

As always, if you have any comments or questions about this post, please do leave them below.

Note: This is a fully updated version of my original Nibble review from 2021.

Disclaimer: I am not a qualified independent financial adviser and nothing in this post should be construed as personal financial advice. You should always do your own ‘due diligence’ before investing and seek professional advice if unsure how best to proceed. All investing carries a risk of loss. Note also that this review includes my affiliate (referral) links, so if you click through and end up investing with Nibble, I may receive a commission for introducing you. This will not affect the price you pay or the product/service you receive.

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My Investments Update May 2022

My Investments Update – May 2022

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Here is my latest monthly update about my investments. You can read my April 2022 Investments Update here if you like

I’ll begin as usual with my Nutmeg Stocks and Shares ISA. This is the largest investment I hold other than my Bestinvest SIPP (personal pension).

As the screenshot below shows, my main portfolio is currently valued at £20,799. Last month it stood at £21,646, so that is a fall of £847.

Nutmeg Main Portfolio May 2022

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £3,166 compared with £3,286 last month, a fall of £120

Here is a screen capture showing performance over the last month.

Nutmeg Smart Alpha May 2022

Obviously the falls are disappointing (although they come after broadly similar rises the month before). As I’ve noted previously on PAS, you do have to expect ups and downs with equity-based investments, and certainly over the last few months there has been no shortage of volatility in world markets. And it’s also worth noting that since I started investing with Nutmeg in 2016 I have still enjoyed a total return on my main portfolio of 45% (or 64.25% time-weighted).

I should also mention that I selected quite a high risk level for both my Nutmeg accounts (9/10 for the main one and 5/5 for Smart Alpha). This has served me well generally, but I’m sure investors who selected lower risk levels will have seen smaller falls last month.

  • If you also have a Nutmeg portfolio and plan to withdraw from it in the next few months, there is certainly a case for switching to a lower risk level right now.

You can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are looking for a home for your annual ISA allowance, based on my experience over the last six years, they are certainly worth considering.

If you haven’t yet seen it, check out also my blog post in which I looked at the performance of Nutmeg fully managed portfolios at every risk level from 1 to 10 (as mentioned, my main port is level 9). I was actually pretty amazed by the difference the risk level you choose makes. If you are investing for the long term (and you almost certainly should be) opting for a hyper-cautious low-risk strategy may not be the smartest thing to do.

I won’t go into detail about my Assetz Exchange investments this month. Briefly, though, regular readers will know that this is a P2P property investment platform focusing on lower-risk properties (e.g. sheltered housing). I put an initial £100 into this in mid-February 2021 and another £400 in April. In June 2021 I added another £500, bringing my total investment up to £1,000. Since I opened my account, my AE portfolio has generated £51.50 in revenue from rental and £82.29 in capital growth, a total of £133.79. That’s a decent rate of return on my £1,000 investment and does illustrate the value of P2P property investment for diversifying your portfolio when equity markets are volatile. You can read my full review of Assetz Exchange here. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

Another property platform I have investments with is Kuflink. They have been doing well recently, with new projects launching almost every day. I currently have over £2,150 invested with them, a significant proportion of which comes from reinvested profits. To date I have never lost any money with Kuflink, although some loan terms have been extended once or twice. On the plus side, when this happens additional interest is paid for the period in question. At present all my Kuflink loans are performing to schedule, with several due to mature in the next few months.

Kuflink recently announced that they were ending their cashback incentive for new members. This used to pay up to £4,000. I know several PAS readers availed themselves of this offer. It’s obviously disappointing it’s now ended, but in a way it’s good news as well. It demonstrates that Kuflink is thriving and they don’t need to offer ‘bribes’ to bring in new investors. As they themselves said in a recent email, ‘We feel now is the right time for us to move away from these campaigns [cashback and refer-a-friend] and utilise the funds within the business to make further enhancements to our products and the platform.’

Even without the cashback incentive, I do still recommend Kuflink and will continue to invest with them. You can read my full Kuflink review here. They offer a variety of investment options, including a tax-free IFISA paying up to 7% interest per year with built-in automatic diversification. Alternatively you can now build your own IFISA, with most loans on the platform being IFISA-eligible.

Another platform in which I have a modest investment is the European crowdlending platform Nibble. This has continued to perform as promised. Several of the loans I invested in have matured and each time I have reinvested the proceeds.

Nibble recently added a new loan category to their offering. This is in the debt collection market; Nibble describe it as their Legal Strategy. This involves investing in loans that are overdue and facing legal action for recovery. Nibble buy these loans at a fraction of their value and then attempt to recover as much of the outstanding debt as possible.

Nibble investors can buy portions of these loans for prices starting at 100 euro (about £84). The company say that investors will receive annual interest rates of between 8 and 14.5% according to how successful their recovery efforts prove. But in any event they offer a ‘buyback guarantee’ that even in the worst case you will receive 8% interest and return of your original investment. I will be trying this out myself soon and also updating my original review, which you can read here if you wish. You can also sign up directly on the Nibble website if you like [affiliate link].

Also this month I wanted to mention that the under-the-radar matched betting opportunity I have described a few times on PAS has closed. My contact there tells me the bookies have tightened up so much on their offers that it is no longer feasible to go on running a free service that makes money for both clients and the company. Final payments went out by the end of April to all existing members (which of course include a number of PAS readers). Again this is obviously disappointing, but I have seen myself that it is getting harder and harder (though not yet impossible) to generate profits from matched betting, especially once you have exhausted the welcome offers.

Anyway, the better news is that the guys behind the business have a new project in the pipeline that will make use of the clever software they developed for the matched betting service. It will work a bit differently from the original programme, but again will be free to join and entirely risk-free for members. They say they expect it to work over a three-month period and generate a one-off payout of between £500 and £1500 per person. In addition, because the new programme will work differently, it will also be open to people who do matched betting themselves (or have done in the past). I will share more details on PAS when I have them – but for now if you would like to be put on my priority list for info, just drop me a line with your email address via my Contact Me page.

Another bit of news is that I have temporarily suspended withdrawals from my Bestinvest SIPP, which is now in drawdown. This is partly in response to volatility in world markets caused by the war in Ukraine and inflation fears (among other things). But also I don’t need the money as much at the moment, as I am now receiving the full state pension. With my other income streams as well, continuing to draw an income from my SIPP would have generated a tax liability, so I thought it better to let the money grow tax-free in my pension fund until I really need it. My personal financial adviser Mike agrees and approves, incidentally 🙂

Lastly, I enjoyed my short break in lovely Llandudno a week ago. I was reasonably lucky with the weather, although it was quite windy. But it was great to see the resort almost back to normal after the lockdowns and other disruptions of the last two years. There were plenty of people out and about enjoying the spring sunshine, as this photo taken at the end of the pier shows 🙂

One other thing that struck me in Llandudno was how widely cash was accepted and indeed welcomed. In the Midlands town where I live most businesses don’t seem to want cash any more and insist on payment by card. I actually had to go to a cashpoint in Llandudno to draw more money. I can’t remember the last time I did that at home!

That’s enough for now, so I’ll sign off till next time. I hope you are keeping safe and well, and making the most of the better weather and lifting of Covid restrictions. If you’re planning any UK holidays yourself, don’t forget I have a list of places I have visited and recommend here 🙂

Disclaimer: I am not a qualified financial adviser and nothing in this blog post should be construed as personal financial advice. Everyone should do their own ‘due diligence’ before investing and seek professional advice if in any doubt how best to proceed. All investing carries a risk of loss.

Note also that posts may include affiliate links. If you click through and perform a qualifying transaction, I may receive a commission for introducing you. This will not affect the product or service you receive or the terms you are offered.

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